Greece unveils new coalition as bailout battle looms

New Democracy leader Antonis Samaras (left) meets Greek President Carolos Papoulias in Athens. Samaras was been sworn in as the prime minister of new Greek coalition, as he took up the challenge of trying to revise the terms an unpopular EU-IMF bailout deal

Conservative leader Antonis Samaras was sworn in Wednesday as the prime minister of a new Greek coalition, as he took up the challenge of trying to revise the terms an unpopular EU-IMF bailout deal.

"With God's help we will do everything we can to take the country out of the crisis," the 61-year-old former foreign minister told reporters after a formal ceremony at the presidential palace that ended two months of political deadlock.

Samaras warned Greece was in a "critical" situation, saying: "Tomorrow, I will ask the government to work hard to give tangible hope to the Greek people.

"I have the majority to form a long-term government of stability and hope," he said, as the Greek economy struggles through a fifth year of recession.

Outgoing premier Panagiotis Pikrammenos told the new prime minister: "You have many battles ahead of you, both inside and outside Greece."

Samaras and his New Democracy party, the winners of an election on Sunday, are the senior partners in a coalition with the socialist Pasok party which will also have the parliamentary support of the small Democratic Left party.

The composition of the new government will be announced Thursday, a government official said.

The agreement comes after three days of intense international pressure for Greece to act quickly and get its reform programme back on track after an election that eased fears of an imminent euro exit for the heavily indebted country.

Pasok leader Evangelos Venizelos said the new government would begin "a major battle" to revise the bailout at an EU summit in Brussels next week.

Democratic Left leader Fotis Kouvelis also said he expected the cabinet to "release the country from the painful terms" of the multi-billion loan.

New Democracy took 129 of the 300 parliamentary seats including an extra 50 seats given to the winner and Syriza took 71 seats. Pasok took 33 and Democratic Left won 17, which gives the new government a majority of 29 seats.

The radical leftist anti-austerity Syriza party came a close second in the election, winning more than a quarter of the vote and the new government will face growing public pressure to ease the austerity conditions in Greece.

Syriza said the new coalition "does not convince us that it will be able to substantially renegotiate the terms of the loan agreement or that it intends to cast doubt on the prevailing neo-liberal politics of austerity in Europe".

The government's first priority will be to restore contact with international auditors and resume the flow of loans that was suspended ahead of the election.

The International Monetary Fund is already pressing to send a team of experts to Greece as soon as possible to examine "shortfalls" over the past two months.

German Chancellor Angela Merkel, who will attend the crunch Euro 2012 quarter final between Germany and Greece on Friday, has invited Samaras for talks in Berlin.

Merkel "wished him luck and success for the difficult work that lies ahead of him", her spokesman Steffen Seibert said in a statement.

"The federal chancellor hopes for good cooperation with Prime Minister Samaras and his government and invited him to visit Berlin," said the spokesman without giving details on when any possible meeting could take place.

Germany are among foreign creditors that have stressed that they are only willing to give Greece more time to meet a deficit reduction target currently set at 2014 but will not change the actual substance of the bailout deal agreed in February.

Eurogroup chief Jean-Claude Juncker echoed Germany's position saying: "There can be no discussions about changing the substance of the agreements but as I indicated three or four weeks ago we can by all means talk about extensions."

Although he said he would respect Greece's international commitments, Samaras promised to go further in his campaign saying he would cut property and sales taxes and freeze widely contested reductions in public salaries and pensions.

The task will fall to the new finance minister, tipped by Greek media to be National Bank of Greece chairman Vassilis Rapanos, a former economics professor who served in the economy ministry when Greece joined the euro in 2001.

Ahead of talks among euro finance ministers on Thursday, a senior European Union official appeared more open to possible concessions on the bailout, saying it would be "delusional" and "stupid" to keep the loan agreement intact.

"We would be signing off on an illusion," the source said on Tuesday, adding that a revised agreement could come "in the course of the summer".

Under the current conditions, Greece has to cut 11.5 billion euros ($14.6 billion) -- the equivalent of five percent of its gross domestic product -- by 2014, although Greek parties want this deadline to be put off to 2016.

Greece has been forced to seek bailouts twice after initially hiding its debt woes, first for 110 billion euros in 2010 and then for 130 billion euros earlier this year. It has also had a 107-billion-euro private debt write-off.

The state meanwhile has stepped up short-term debt auctions to restock a depleted treasury, as officials cited in the Greek press before the election said there were only enough cash reserves to pay salaries and pensions until July 20.

The eurozone is hoping the result can draw a line under a lengthy period of uncertainty that has unsettled markets in a country where the European sovereign debt crisis kicked off in 2009 before spreading across the continent.